National News Misses Mark on Candyland

Published in the January 2014 Issue Published online: Jan 10, 2014 Phillip Hayes
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The U.S. candy business is booming.

While most industries constricted, U.S. confectioners and other makers of sugar-containing products (SCP) have added jobs since 2006, according to Bureau of Labor Statistics data.

Domestic SCP plants are announcing major expansions. Foreign SCP companies are opening plants in America. Share prices for top SCP companies have outpaced other stocks. And net profit margins in the sector were 60 percent higher than other food manufacturers between 2004 and 2012.

So why in the world would two national news publications like the Wall Street Journal and New York Times write articles about U.S. sugar prices pushing confectioners abroad?

“It’s simply not true,” said Jack Roney, an economist with the American Sugar Alliance. “U.S. sugar prices are low, and candy companies are thriving and expanding.”

Roney pointed to Department of Commerce data showing increased candy production in America in recent years, as well as a list of candy factory expansions announced since 2011.

Among those domestic expansions was Spangler Candy, an Ohio-based company that the New York Times ironically used as its primary example of a fleeing candy company.

“American candy producers, like [Spangler Candy] the maker of Dum Dum lollipops, are moving jobs to Mexico to take advantage of the lower sugar prices there,” read the New York Times article.

Actually, according to a press release from Spangler Candy, it needed more space to keep up with booming sales, and its growth plan was two-fold.

First, it added 20,000 square feet to its Ohio plant as part of a $5 million expansion project to produce branded products. Second, it procured space in Mexico to produce generic candy it makes for other companies’ labels.

“Bottom line, Spangler has expanded its U.S. presence—not relocated,” Roney said. “If any companies have relocated, it’s because of cheaper labor, lower taxes and reduced regulatory burdens—not sugar.”

But the New York Times failed to report on U.S. expansions by Spangler and others, and, like a similar Wall Street Journal article, completely missed the mark on sugar prices, Roney said.

“Today, sugar is cheaper in America than it is in Mexico, Canada and most other countries,” he explained.

According to the U.S. Department of Agriculture, candy companies paid an average of 26 cents for a pound of sugar in October—the exact same price they paid in 1983.

Mexican sugar prices, meanwhile, traded for 27 cents per pound in October. As for world prices, it would currently cost 28 cents per pound to import refined sugar from the world market.

Roney pointed to other prices to drive home his point that sugar is being wrongly vilified by a handful of reporters.

“U.S. candy companies purchasing sugar today are paying about the same today as they did 30 years ago,” he said, “but the cost of a candy bar has jumped 300 percent over that same time. If someone’s getting rich in this scenario, it isn’t the sugar producer.”

Both articles surfaced as Congress started negotiating differences between the House and Senate’s competing versions of the pending farm bill. While those bills contain many differences, they both have the same sugar policy provisions.

“Congress recognizes the need to provide an adequate safety net for sugar growers facing low, stagnant prices,” he said. “That’s why both the House and Senate rejected repeated attempts by candy companies to gut that policy and outsource America’s sugar production.”

Of course, that was another important detail conveniently omitted from the misleading articles in question.